I’m normally beavering away, sharing my opinions with you.
Today, though, you’re in the driver’s seat. I’d like to hear from you.
Tucker Carlson and Ben Shapiro exploring their philosophical differences.
So this is what we’re going to do together …
I’ll give you a short video to watch. It’s only 1:54 minutes long;
You watch it. It’s a discussion between Tucker Carlson and Ben Shapiro. They talk about the impact of technology on jobs, taking two very different approaches;
I’ll ask you a question about it;
You then answer that question in the poll below; and
Next week, I’ll let you know what your answer says about your political philosophy.
Well, it was mischief-making in the sense that I like to sharply define the line between liberal and conservative and then, with all the goodwill in the world, provoke people to think and explore these differences.
There is a difference, you see.
So I posted a video clip between American commentators Tucker Carlson and Ben Shapiro. They had opposing views of how to handle inevitable job losses caused by driverless trucks. It illustrated the difference eloquently.
Then I challenged you to vote whether you agreed with Tucker Carlson or, by inference from his question, Ben Shapiro.
The results are in:
37% Tucker Carlson; and
63% Ben Shapiro.
If you agreed with Tucker Carlson, you are a conservative.
If you agreed with Ben Shapiro, you are a liberal.
As I repeat ad nauseum, conservatives wish to conserve. Here, Mr. Carlson would be happy to conserve current industry development rather than advance it. He’d be happy to keep truck drivers in jobs for which technology has a more efficient solution, the driverless truck.
By inference from his question, Mr Shapiro would prefer to let the free market take its course, permit the technology and have truck drivers migrate into related freight work or even redeploy into other industries.
There’s a big difference in approach.
Liberals and conservatives are not the same.
You’re an optimist if you’re a liberal (or if you must, a classical liberal or libertarian, they all mean the same thing!) You believe in people, in their ability to innovate and in their ability to adapt to change. In the case of driverless trucks, you fully embrace this new technology and you want to encourage the creators of that innovation by allowing it to be unleashed on the market. No restrictions. And you have faith truck drivers, given appropriate notice, are more than capable of finding new work. You are confident they aren’t simply going to sit and bemoan the loss of one type of occupation. Rather, you know they’ll have to find other work to feed their families, as we all do.
You’re a pessimist if you’re a conservative. You believe, as Mr Carlson even said, that you don’t want high school educated men let loose on society without a job. He assumes that high school educated men would suddenly become helpless and even dangerous. That’s the inference.
Blimey!
Talk about loss of faith in our fellow citizens. It’s a nanny state attitude. What evidence is there for this? None that I can find. On the contrary, there is plenty of evidence high school educated men are adaptable.
Take 1980s Newcastle. A city bustling with blue collar men busily working the steelworks. Now look at 2020s Newcastle, a lifestyle, health and university town. What happened to these steelworkers? Was Newcastle ravaged by idle high school educated men wreaking havoc across the city? No. Some of these men were due to retire, some moved to the Wollongong works, some stayed in Newcastle moving into value-add niche industrial enterprises, some stayed in the large industrial companies but worked from home as the companies left, some started their own businesses using their skills in new ways, some simply moved into new industries altogether, some retrained, some took early retirement to enjoy life.
Take my grandfather. He grew up and apprenticed as a wheelwright at the tale-end of the old wooden spoke and hub horse-drawn carts. Then as his career developed, wood gave way to steel spoke and hub wheels. Then steel plates came in. What a transition!
Further, when a conservative says ‘let’s restrict technology’, what does that signal? It’s the same as saying to every inventor and innovator, every scientist and engineer, to every entrepreneur and free thinker that their fresh, new ways of solving old problems are unwelcome.
As I say, conservatism’s tendency to oppose change can be helpful. However, if that’s all we on the Right do is oppose and conserve, we end up sliding to the Left. Opposition and conservation are insufficient to fight the Left.
We must treat our innovators with respect and let them advance society. We must not be conservative and stand in the way.
We must treat our fellow citizens with respect, have confidence in them that they can cope with change. We should not mollycoddle them.
Don’t be a conservative like Mr. Carlson.
Be a classical liberal like Mr. Shapiro in this debate.
In my last piece, Remembering Frederick Douglass, I discussed the evils and folly of centralised wage-fixing which, amongst other things, prevented people – young people in particular – from getting a start in the workforce; a foot on that first rung of the employment ladder.
Today, we look at centralized wage-fixing’s partner-in-crime – tariff protection. The other side of the micro-economic coin, if you like.
It was Bert Kelly (1912–1997) who once said, ‘The really bad ideas never go away’.
Bert Kelly. Member for Wakefield (Lib, SA). Leading advocate for free markets.
Along with centralised wage-fixing, protectionism is another of those really bad ideas.
The Australian settlement of 1900 was based on five key principles – two were economic, two were social and one was the imperial benevolence of the mother country.
The two social principles were the White Australia Policy and State Paternalism.
The two economic principles were regulated labour markets and tariff protection. These two went hand in hand. As centralised wage-fixing delivered arbitrary pay increases, thus increasing the cost of production, the price of the goods rose commensurately. As a result, imported goods became more competitive. In response, an import tax – a tariff – was placed on these imported goods to ‘protect’ Australian jobs from competition.
By the late 19th century, NSW had prospered under its free trade regime and had overtaken protectionist Victoria, becoming the continent’s leading colony. Following the collapse of the gold-rush, and to sustain its economy, Victoria borrowed heavily in the British capital markets but soon found itself impoverished and losing population – the consequences of 30 years of protectionism. NSW political leaders such as George Reid speculated that Victoria was desperate for federation so that its economic problems could be shared with the other colonies!
By the early 1920s, the newly-formed Country Party under Earle Page – influenced by the rural export industries of wool, meat and wheat – was officially opposed to protection, yet supported the Scullin Government’s belief that tariffs on imports would help restore employment during the Great Depression (1929–1932) by handing out tariffs virtually on demand. It didn’t work.
In 1930, Australian historian Keith Hancock had published his book Australia which contains this memorable reference to protectionism in Australia:
‘Protection in Australia is more than a policy: it is a faith and a dogma. Its critics, during the second decade of the twentieth century, dwindled into a despised and detected sect suspected of nursing an anti-national heresy. Protection is interwoven with almost every strand of Australia’s democratic nationalism. It professes to be a policy of plenty, but it is a policy of power.’
Bert Kelly arrived in Federal Parliament in 1958 as the Member for the South Australian seat of Wakefield and from then until he left the Parliament in 1977 fought a long and often bitter campaign against protectionism – first against a very powerful Deputy Prime Minister and Country Party Leader in John ‘Black Jack’ McEwen, and then against the strongly-defended populism of ‘protecting Australian jobs’.
Bert Kelly was opposed to protectionism because, like centralised wage-fixing, it was not only economically foolish, it was also morally wrong. It was wrong, he said, because it created a situation in which governments granted favours to some, who became greatly enriched, at the expense of others, who were at best impoverished and at worst, ruined.
On a parliamentary delegation to India, Bert visited a factory making bed sheets which wanted to sell in Australia but was unable to do so due to the high tariff (import tax) placed on imported bed linen. It was the same at an Indian shirt factory.
For example, a shirt made in Australia cost $50 to buy. An imported shirt $20. By imposing a $30 tariff on the imported shirt, consumers were told they had to pay $50 for a shirt to ‘protect Australian jobs’. If there were no tariff, however, and consumers were able to buy a shirt for $20 instead of $50, that would give them Bert argued, $30 to spend on something else. And it is that something else that is the catalyst for emerging industries.
Tariffs support declining industries, free trade supports emerging industries.
Bert also learned that Indians were desperate to buy Australian milk powder for their children but did not have the foreign exchange – Australian or US dollars – due to the insurmountable tariff on their textile goods entering Australia.
Thus, both India and Australia suffered. To quote Bert Kelly:
‘Australian dairy farmers can’t sell their skim milk powder, Australian families have to buy expensive ‘Australian-made’ sheets and shirts, Indian children don’t get milk and Indian factories can’t make textiles. A lose-lose situation if ever there was one. All this brought to you by our good and wise government’.
At the same time, Australia was giving aid money to India.
Bert spoke frequently in favour of Community Aid Abroad but against aid being given with no strings attached. ‘Trading with poor countries is a far better way to help them than giving them aid,” he argued.
With the union movement’s new friends in Canberra, expect to see more on the wages/tariff front.
After three long years of covid lockdown-induced solitary confinement, a loyal Liberty Itch subscriber cut loose, left Australia for South-East Asia and found herself in Vietnam.
Animated by what she saw, I started to receive her much-welcomed dispatches about daily life there.
Now, if you read any 1960s and 1970s history, you know Vietnam is communist. But what my friend’s streetscape dispatches reveal is that daily life is anything but centrally-controlled. In fact, what she witnessed felt more like the hustle and bustle of enterprise or, as our intrepid adventurer pithily described …
“official communism, sure, yet with a je ne sais quoi libertarian, freewheeling spirit, small-scale capitalist at every turn.”
I’ll step out of the way. These are her words …
There are no rules, Kenelm. It’s fend for yourself. Even these communists realise capitalism is the way to go. Free markets and small business. It feels like what I imagine 1880s London or 1980s Hong Kong to be. Free. Laissez faire. Taxes are low. 5%+ for residents. 20% flat tax for foreigners. The communists simply don’t have the money for bureaucrats. They’ve taken themselves out of the game and let people live their own lives.
There’s genuine economic development here. It’s booming.
There is little of government here to save you. You save yourself or drown, which isn’t an option.
So, family is very important. Your family takes care of you in your old age, not the government. You know, like we used to do in Australia.
Prices are so low.
Petrol is a mere 37 cents a litre. No fuel excise. Can you imagine?
Food is cheap.
At the end of a long, hard day, cocktails are $2.50.
Road rules? The only rule here appears to be there are no rules, almost anarchy. Yet it works. A loose framework exists where thousands stop on a red light. But only when it suits them. Lanes on the road? Only use those if you absolutely must. It’s better to weave right, left, and even preferrable to pit your life against a semi-trailer coming from the opposite direction, because you absolutely must overtake the vehicle in front of you.
Pedestrian crossings? A mere piffle, an abstract idea where someone thought stripes of white paint were to beautify the road. The pedestrian who stands at one end expecting the traffic to stop for her, hah! She is the pedestrian who never returns home alive. As one local said to our observer, “If you don’t move, you’ll die. You need to move. Not too fast. Not too slow” … to which I replied, “Oh, you mean the Goldilocks effect”. The harrowed local muttered “Who is Goldilocks?” under his breath. Big tip! It’s best to wait for a small gap in the traffic. Walk whilst praying to God the entire time that He will see you safely to the other side.
Footpaths? You know, for human feet? A figment of an idea, I tell you. They are just another lane for bikes to scoot down in the gridlocked peak hour traffic. Footpaths are places to park, to open your front gate, to wheel your dolly-trolly, to sell your wares for the day. All day and every day. The pedestrians are after-thoughts.
Did I mention $3 Singapore Slings?
There aren’t suffocating regulations about, say, straws. Yes, you can get a decent plastic straw in Vietnam!
Communism, lurking in the background somewhere, OK. But the streetscape looks what I imagine laissez faire to be. It’s a rambunctious, rollicking, throbbing freedom, not that poor imitation back home. It’s every man for himself. As the saying goes, “It’s the quick or the dead” around here. Maybe that’s because the communists simply can’t make central planning work to feed people. Maybe they gave up that aspiration long ago. Everyday people her feed themselves and their families through good old-fashioned free trade.
This is what Australia is competing with! Enterprising, self-reliant people. Low prices. There’s a lot of manufacturing being exported. They value add. It’s not a big quarry like other economies we’re familiar with!
The West is on the precipice of losing something incredibly precious.
In comparison to Vietnam, we need to wrap society in cotton wool and legislate for every possible scenario that might make us sick, kill or injure us.
We’ve left the realm of common sense, we’re stifled and soft-pruned by a socialist bubble bath. Individuals can no longer assess risk with any degree of rationality. Individuals are increasingly absolved of all self-responsibility and that power is being placed into the hands of faceless bureaucrats and legislators who make decisions on our behalf. It’s not needed. It’s not in our best interests. Vietnam proves it.
Remind my fellow Liberty Itch subscribers, as I often remind my friends, none of us are getting off this planet alive! We need to take back our autonomy, before it’s too late.
To all of which, I can only say to my friend, hear hear!
In his excellent Liberty Itch post Golden Years last week, Max Payne writes, “By the time today’s young people are finally ready (or allowed) to retire, they may find they face a double challenge. First, their superannuation funds might have been ransacked by previous generations; second, the availability of quality care may be limited due to the challenge of delivering high-standard care without a large tax-base – especially in times of slowing productivity.”
In their hit song My Generation, English rock band The Who – Pete Townshend on guitar, Roger Daltrey on vocals, John Entwistle on bass, and Keith Moon on drugs – err, I mean drums – sang, “…things they do look awful cold …. hope I die before I get old.”
It is reported that German economists are baffled by reports from Australia that rising house prices are deemed to be ‘good news’. In Germany, inflation in house prices – like inflation in energy prices or food prices – is considered to be just the opposite.
“How can it be good news?”, they ask, “when it takes two incomes to support a mortgage when previously young couples could buy a home and raise a family on one income? Or that homebuyers will pay many hundreds of thousands of dollars more in mortgage payments and government taxes and charges than would otherwise be the case?”
Why has housing become so expensive in Australia? Motor vehicles, whitegoods, kitchen appliances, widescreen TV sets, personal computers and mobile phones are consumed in abundance around the world, yet prices remain low. Why is a house, which like other manufactured goods is made from readily accessible components, so much more expensive than other consumer products?
No doubt demand stimulators like high immigration, low interest rates, capital gains concessions, negative gearing and first home buyer grants have increased demand for housing. However, increases in demand do not, of themselves, cause prices to rise. The exponential increases in demand for mobile phones, laptops and digital TVs did not lead to increases in their prices. In fact, the opposite occurred – prices fell – in some cases by more than half, due to increases in supply. The 1950s and ‘60s population explosion – the ‘baby boomer’ generation – likewise saw massive increases in demand for housing, yet house prices remained stable during that time because supply was able to keep up with demand.
So, what has gone wrong in recent years?
As most people know, over the past 20 years or so the actual cost of building a new house in Australia has roughly kept pace with inflation. Land prices, on the other hand, have skyrocketed.
By restricting the amount of land available on the urban fringe, state governments have sent the price of entry-level housing through the roof.
Land is the problem.
On the fringes of our cities there is more than an adequate supply of cheap, unzoned land.
Cheap land attracts not only home buyers but commercial interests as well, leading to more employment opportunities.
So why are houses and commercial developments not being built on this cheap land?
In short, manipulation of zoning laws.
(For Part 2, click https://libertyitch.com/2023/08/22/talkin-about-my-generation-part-2/)
Typically, when the Government is criticised for its interference in our private lives and businesses, it justifies this by drawing a comparison with European countries. Sure, Australia has unsustainable state and federal deficits, business closures exceed new businesses, there is increasing crime and homelessness, a housing affordability and supply crisis, plus a plethora of worsening social and economic statistics. But some of our taxes are lower than Germany, we are not as broke as Greece, and citizens are freer than in North Korea. Therefore, apparently, everything is fantastic.
The Government has a point, though. Looking at the nations of the G20, most are facing far bigger problems than Australia, and none are moving in a libertarian direction. All are increasing taxation, expanding the size and scope of the public sector, and raising the difficulty of operating a private business. There are almost no recent examples of a country achieving superior outcomes by moving in the opposite direction; except, perhaps, for the small nation of Georgia.
… first task was to cull the regulation that was facilitating the widespread corruption and strangling the Georgian economy.
Georgia was the birthplace of Joseph Stalin and formerly part of the Soviet Union. A decade after the Soviet Union’s collapse, it was a basket case. The government was insolvent; the country was rife with corruption, crime and poverty; the police force was essentially a mafioso street gang; infrastructure was crumbling; utilities such as power and water only functioned occasionally.
In 2003 there was a revolution and Mikhail Saakashvili was elected to the presidency. The usual gaggle of globalist socialist technocrats showered Saakashvili with the usual ruinous recommendations straight from the book ‘Confessions of an Economic Hitman’: take out impossibly huge IMF loans, increase taxation and impose ruthless austerity.
Shockingly, Saakashvili declined the loans and socialistc advice; incurring ridicule and disapproval from the EU, US and IMF. Instead, he immediately cut taxes by 70%.
Mikheil Saakashvili. Third President of Georgia. 2008-2013.
As a result, rather than deepening the country’s bankruptcy – as predicted by the IMF – tax revenue doubled in just the first year. Over Saakashvili’s two terms, the economy went on to quadruple in size while tax revenue increased 1200% and poverty decreased by 75%.
Saakashvili appointed a committed, renowned libertarian, Kakha Bendukidze, as the Minister of Economy and Reform Coordination. Bendukidze was no academic bureaucrat; he was a self-made multi-centi-millionaire. He had a degree in biology and made his fortune creating a chemical manufacturing empire in Russia.
Bendukidze’s first task was to cull the regulation that was facilitating the widespread corruption and strangling the Georgian economy. The head of every government agency was forced to justify their existence to him, like contestants on the TV show, Shark Tank. Bendukidze had authority to eliminate any agency on the spot.
Among the first of the Agencies to be eliminated was the police force. The force was determined to be so corrupt, and so distrusted by the populace, that the only solution was to fire everyone. So that is what they did. Somehow they managed to quickly form a new police force. The whole exercise earned the trust and respect of citizens, so the streets became safe. Within just three years Georgia was ranked among the top countries in the world for personal safety.
Shockingly, Saakashvili declined the loans and socialistc advice; incurring ridicule and disapproval from the EU, US and IMF. Instead, he immediately cut taxes by 70%.
In his first two months, Bendukidze slashed approximately 70% of regulations and the majority of government agencies. He and Saakashvili also instituted a policy that no new regulation could be added unless two existing regulations were repealed. In total they achieved a 90% reduction in regulations, resulting in Georgia being recognised as the top reforming country in the world by the World Bank, and leaping from 137th to 8th in the Ease of Doing Business rankings. It also went from ranking among the most corrupt countries in Europe, to 3rd least corrupt.
They not only cut tax rates; they cut the tax code down to just six taxes, and amended the constitution so that the only way to increase taxation was via a referendum. This gave confidence to the international investment community that Georgia’s reforms were stable and reliable, resulting in a quadrupling of the rate of international investment.
Georgia represents a compelling case study in contemporary politics and economics. It was brought to ruin by Marxism, then revived by the unapologetic application of libertarian principles and free market capitalism.
The Albanese government manufactures political support using sacrificial lambs. One lamb lined up for sacrifice is the live sheep export industry. The Department of Agriculture, Fisheries and Forestry website currently states that “The Australian Government has committed to phasing out live sheep exports from Australia by sea”.
Labor demurred when questioned pre-election, but the WA Labor platform clearly articulates the party’s position: “WA Labor recognises that there are strong economic, jobs and animal welfare reasons for transitioning from the live export trade to domestic processing of animals for local consumption and the chilled and frozen meat trade.”
Farmers Forced to Cull
Due to the La Niña system of the past three years, Australia has an excess of approximately 640,000 sheep. The incoming El Niño weather system will bring warm dry conditions, impeding feed growth. A recent report by Australian Bureau of Agricultural and Resource Economics and Sciences states that Australia’s agricultural sector will shrink by 14% in 2023-24. Simultaneously, Labor is pushing ahead with its live sheep export ban plan.
Both have contributed to the mutton price dropping from $100 per head in January 2023 to a devastating $1 per head over the last couple of months.
The government has played the live sheep export industry for a fool.
Trucking sheep to sales yards is particularly expensive currently, and there have been cases of unsold sheep returned to the farm at the producer’s expense.
In the face of this terrible confluence of factors, some farmers have been forced to shoot their sheep. A heartbreaking waste of life, work and resources.
World-class Sheep Welfare
Australia’s live sheep export is conducted by two exporters based in Western Australia. Sheep are sourced from across the state. An entire industry supports the complex logistics involved in this supply chain.
Throughout the live export process, sheep welfare is subject to rigorous oversight. Of over 100 countries that export livestock, Australia is the only one requiring adherence to specific animal welfare regulations for exported livestock, including after arrival in the importing country. These regulations include:
Farmgate to the ship: Australian Standards for the Export of Livestock 2021; and
Importing countries: Exporter Supply Chain Assurance System (ESCAS) 2011.
On board the ships, sheep are accompanied by an Australian-accredited veterinarian. Vets complete three rounds of the decks per day. In addition to this, sheep are inspected before, during and after their journey by additional accredited animal health professionals. To ensure exporters are compliant with Australian welfare guidelines, each part of the supply chain across Australia and importing countries are also audited by independent, qualified entities at least once a year. Auditors review:
Animal handlers and their techniques; and
Facilities: ports, transport vehicles, feedlots, abattoirs.
Treacherous Memo
Known for its world-class standards, Australia raises robust and sought-after sheep. For multiple reasons, both cultural and economic, the countries in the Middle East prefer live export over chilled meat.
Formerly, Saudi Arabia was Australia’s prime sheep market, reaching one million sheep annually until trade ceased in 2012 due to that country rejecting Australia being involved in welfare once the sheep have arrived. Efforts have been underway to reopen live sheep exports to Saudi Arabia, compliant with Australian standards, through a revised health protocol. This would significantly boost the Australian sheep industry and potentially more than double current exports.
The Federal government states that access to the Saudi market is open, subject to meeting Australian requirements and ESCAS regulations. However, this statement is in direct contradiction to its own actions. Documents obtained via freedom of information state that bureaucrats advised Agriculture Minister Murray Watt in a department memo in January of 2023 that they were ending negotiations with foreign governments regarding new live export agreements.
Australia’s agricultural sector will shrink by 14% in 2023-24. Simultaneously, Labor is pushing ahead with its live sheep export ban plan.
This was months prior to Watt deploying his panel to consult on phasing out live export. The Department announced this in spite of interest in live sheep export agreements from multiple countries including Saudi Arabia, Morocco and Kuwait. The government has played the live sheep export industry for a fool.
Kuwait has indicated it regards Australia’s live export ban policy as hostile. Kuwait’s Commerce and Industry Minister, Mohammad Othman Al Aiban wrote to Minister Watt stating the ban will imperil relations between Australia and importing countries.
Farmers
On the Department of Agriculture, Fisheries and Forestry website, the government assures us that, “The phase out will not take place during this current term of the Australian Parliament.” This attempt at reassurance rings hollow, considering the department’s memo on ceasing negotiations.
The treacherous actions of the Department, and lack of a specific timetable, means that farmers have no way of planning for the future. Agriculture carries a high level of unpredictable risk, including droughts, floods and bushfires. The Labor government has heaped an unnecessary burden of risk and uncertainty on the industry.
Some thirty plus years ago, a fellow by the name of Kerry Packer appeared before a House of Representatives Inquiry into Print Media.
Kerry Packer. Appeared in the House of Reps Inquiry into Print Media in 1991.
The context of the inquiry was that the owner of the main metropolitan newspapers and classifieds, Fairfax, had gone broke. And with Fairfax having gone broke, Packer was trying to buy into the re-floated business.
This was a time before the Internet, when newspapers actually made money and lots if it from their classifieds business. Fairfax’s classifieds business was referred to as the ‘rivers of gold’.
There is a tale to tell here around Malcolm Turnbull who was previously Packer’s in-house lawyer and who, by this stage, had moved on and was representing the junk bond holders of the broke Fairfax. But that is for another time.
Businessman Kerry Packer with future Prime Minister, Malcolm Turnbull.
For his masterclass in its entirety, see the video at the end of this article.
There are some much younger looking folk in it, including one Peter Costello. However, this is not to delve into the issues of media, but rather the diversion that took place late in the piece when Packer spoke about the risk to Australia from the constant meddling of Australian parliaments and the risk to investments into Australia. It was a Packer masterclass and should be shown in every school and every parliamentarian induction session.
The more things change the more they stay the same.
Highlight 1 – when Packer says to ALP curmudgeon John Langmore:
“You seem to be completely unaware of the Constitution of Australia.”
Highlight 2 – when Packer points out that in his lifetime, tens of thousands of laws had been passed but that Australia was not a better place for all those new laws. He also suggested that for every law passed, another law be repealed. Packer said:
Every time you pass a law, you take someone’s privileges away from them.
Highlight 3 – again when Langmore accuses Packer of minimising his tax. To which Packer replied:
I don’t know anyone who does not minimise their tax. If anyone in this country doesn’t minimise their tax, they want their heads read, because as a government, I can tell you that you’re not spending it that well that we should be donating extra!
Which brings me to superannuation wars 2023 when Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones flagged yet more changes to superannuation taxes.
The proposal is couched in fairness, but the truth is that like drug addicts, the government is in desperate need of more money.
A retiree earning $100,000 a year in super fund investment returns typically pays no income tax, whereas a wage earner receiving the same amount pays $23,000 tax
This is neither fair nor just. But the Government’s problem, as with the same problem for the Coalition, is that they have no credibility when it comes to tax changes and tax reforms. This because they won’t do the work of demonstrating that what is currently being spent is being spent efficiently and effectively.
Instead, piles of money and political capital are being expended to generate what will likely be less than $1 billion per annum of additional taxes.
Talk about perverted priorities.
There is much wrong and distortionary with the Australian tax system. It is a train crash. But until government does the fundamental and hard work of spending reform, tax reform will be seen for what it is. Just an attempt to pump more water into a leaky bucket.
According to the ABS, for the 12 months to June 2021, the 3 tiers of Australian government managed to generate $810 billion of revenue. But they spent $970 billion or near half of GDP generating a combined deficit of $160 billion.
Our governments don’t have revenue problem. They have a spending problem. Message to Labor, Liberal, National and Greens governments, as Kerry Packer said quite well and clearly:
“you’re not spending it that well that we should be donating extra!”
As Australia faces a rental crisis, the Greens are agitating for rent control. Chief among their voices is Adam Bandt, whose clarion call is: “Unlimited rent increases should be illegal.”
The Greens and their cheer squad claim rent control protects tenants from excessive rent increases and provides affordable housing options. Such policies would be implemented in response to affordability concerns, shortages, and displacement risks in gentrifying areas. Advocates assert rent control maintains community diversity, prevents homelessness, promotes tenant stability, and offers security against sudden and drastic rent hikes.
Introducing rent control scores politicians quick points. However, the policies are vociferously opposed by the majority of economists.
Mr Assar Lindbeck was a Swedish professor of economics, a contributor to a Nobel Prize for Economics, and a socialist. Sweden also has the most restrictive rent controls of all OECD countries. Lindbeck wrote:
Assar Lindbeck
“In many cases rent control appears to be the most efficient technique presently known to destroy a city — except for bombing.”
Lindbeck’s quip on rent control highlights a rare consensus among economists. Across all persuasions (neo-classicals, Keynesians, Austrians and socialists), economists agree that rent control is a proven failure.
This is shown by the “Rent Control Survey” 2012 conducted by IGM (Initiative on Global Markets) Forum. To the question: “Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them” – 81% of economists decisively answered ‘Disagree’.
Rent control manipulates supply and demand dynamics, corrupting markets and causing inefficiencies.
It has a blighted history of unintended, negative consequences and can permanently affect rental housing markets. Contrary to the intended purpose as an anti-poverty strategy, poor families suffer worst of all.
As housing quality and availability declines, the middle class can often find alternatives. Poor families cannot. Higher-income households can also benefit under rent control, by receiving greater subsidies. In 2018, San Francisco city staff presented their first ‘Housing Needs and Trends Report’ and ‘Housing Affordability Strategy’ to a meeting of the city’s Planning Commission. A few notable admissions included:
Households that moved into rent controlled units are much more likely to be higher income than in the past.
Housing cost burdens worsened for all but the highest income households.
The city struggled to substantially improve housing affordability for low and moderate‐income households, and does not have a comprehensive picture of how various policies and resources work together to achieve affordability outcomes.
Decreased profit margins incentivise landlords to prejudice tenant selection based on income and credit history. This disadvantages young, low-income families, especially single-parent households. It also impedes racial and economic integration by discouraging tenant mobility. In his study ‘Rent Control, Rental Housing Supply, and the Distribution of Tenant Benefits’ 2002, Dirk Early states “If landlords believe that larger households headed by young persons lead to quicker depreciation of their units, the rationing of units by landlords would lower the probability of larger and younger households finding rent regulated units.”
Rent control unfairly burdens housing providers, by forcing below-market rates of return. This effectively transfers income from property owners to occupants of rentals. Understandably, landlords and investors are reluctant to accept this. In his study “Rent Control Effects through the Lens of Empirical Research” 2022, Konstantin A. Kholodilin reviewed 60 studies from 18 countries. Over 50% demonstrate rent control’s negative effects on new residential construction. All the studies confirm rent control policies adversely affect quality of housing as decreasing rent revenue diminishes funds for maintenance and refurbishment.
Such proven, unintended consequences of rent control policies highlight the need for communities to explore alternative solutions for poor and middle-class housing. The libertarian solution to housing affordability and availability is elegant in its simplicity. Enable the free market to increase housing supply.
In 2011, councils across Perth, Western Australia were given individual infill development targets by the state government. By 2016, 94% failed to achieve their targets. More than half had not reached 50% of their goal.
Belmont, ‘City of Opportunity’, was one of the success stories. The city was proactively open and receptive to the market for over a decade. This encouraged robust investment. Belmont has maintained its infill development and continues to attract a wide range of families and businesses to live, work and invest in the city.
When considering rent control, it is worth reflecting on the adage attributed to Mark Twain “History doesn’t repeat itself, but it often rhymes”. Government enforced rent control predictably delivers negative outcomes.
The free market is the only proven means by which to solve Australia’s rental crisis.
Red tape is a productivity-sapping and innovation-destroying virus on business. Australia is feeling the effects of a generation of governments that believe any problem in the world can be solved with another little rule, constraint or compliance requirement.
Australian business is suffering death by a thousand cuts.
There are too many rules to actually know and obey.
It’s worse than a mere harmless intent though. Too many politicians and bureaucrats cannot help but paint business as the bad guy, an evil that needs to be contained.
There are enforcers of the rules in all three levels of government. Workplace regulations, tax, superannuation, industrial relations awards and so on are dictated by the Federal government with their powerful agencies, particularly the ATO. The State governments are the most interventionist, with licensing, WHS, regulation and compliance of premises and properties, payroll taxes, stamp duties. These are enforced by an army of bureaucrats from scores of agencies. Then finally our dear local councils look over us to make sure we are operating according to their codes and plans, their rangers constantly on the lookout to catch us out. Sadly, they are aided and abetted by many citizens who see it is their duty to dob-in the smallest misdemeanour.
The Liberal Party are as bad as the left leaning parties, full of party careerists with little real-life experience. They talk of removing red tape, but the track record of recent Liberal governments has been to pile on more. They are incapable of addressing the problem because they do not genuinely believe it’s a problem.
The system is so complex, many small businesses do the same as mine. We do enough to get our business open and what we can grow and prosper, despite the myriad of regulations we are knowingly or accidentally breaching. But there are too many rules to actually know and obey. Ignorance of the law may not be a legally valid excuse, but ignorance is virtually inevitable when the law regulates almost every aspect of life and business. We are all commonly breaking the law because it is impossible not to.
So, what would I do about liberating business from this byzantine morass of red tape? How do we unscramble the omelette?
First, all new laws should have a sunset date of 5 to 10 years. The law lapses automatically if it isn’t extended.
Second, we sunset all existing laws over the next 5 to 10 years. Yes, every single law would be assigned a sunset date to lapse. This can be a random date; it doesn’t matter. As long as the law is reviewed or lapses.
Thirdy, we halve all fines and penalties. We remove incentives and rewards for the government to seek out non-compliance and confrontation. We reduce the size of the government to get rid of the people imposing the rules and bleeding off our hard work.
Finally, we abolish and cut taxes. Abolish payroll tax as it taxes job creation and discourages investment. Cut company and personal income taxes to remove the disincentives. Australia’s company tax rate should be 15% to more closely align with our trading partners. Income taxes should be reduced to a top rate of 25%, so the best and brightest want to come to Australia.
When Al Grassby was Immigration Minister in the Whitlam government in the early 1970s, he announced that multiculturalism was to be Australia’s future policy....
